Gary Wang, a former executive at the now-bankrupt cryptocurrency exchange FTX, avoided prison time after a federal judge in Manhattan sentenced him Wednesday for his involvement in the massive fraud orchestrated by Sam Bankman-Fried.
Role in the FTX Fraud
Wang, the former Chief Technology Officer of FTX, pleaded guilty to four felony counts of fraud and conspiracy in connection with the embezzlement of $8 billion from FTX customers. Wang, who wrote the software code that enabled the fraud, cooperated extensively with federal prosecutors, testifying against his former boss in the trial that led to Bankman-Fried’s conviction.
During his testimony in October 2023, Wang revealed that Bankman-Fried directed him to adjust FTX’s code to grant Alameda Research, FTX’s affiliated hedge fund, special privileges. These privileges allowed Alameda to secretly withdraw billions of dollars from the exchange, fueling speculative investments, hedge fund losses, and political donations.
Wang’s Background and Connection to Bankman-Fried
Wang and Bankman-Fried’s partnership began years before the FTX scandal. The two met at a summer math camp in high school and reconnected at the Massachusetts Institute of Technology. Their collaboration led to the creation of FTX, which was based in the Bahamas until its collapse in November 2022.
Wang lived with Bankman-Fried and other FTX executives in a $35 million penthouse in the Bahamas, where they managed the business until its bankruptcy.
Judge’s Decision and Leniency
U.S. District Judge Lewis Kaplan spared Wang from prison, citing his cooperation and lesser involvement in the fraud compared to other FTX executives. Prosecutors praised Wang for aiding their investigation, highlighting that he did not personally profit from customer funds and had worked on software to assist the U.S. government in uncovering financial fraud.
Prosecutors also noted that Wang was developing tools to detect fraud in cryptocurrency markets, a project he could continue if not incarcerated.
Repercussions for the FTX Inner Circle
Wang is the last member of Bankman-Fried’s inner circle to face sentencing. His lenient sentence contrasts with the fate of Bankman-Fried, who is serving a 25-year prison term after being convicted of fraud, conspiracy, and other charges.
Caroline Ellison, former Alameda CEO and Bankman-Fried’s ex-girlfriend, received a two-year prison sentence in September. Nishad Singh, another FTX executive, also avoided prison after cooperating with prosecutors.
Bankman-Fried’s Conviction and Appeal
Sam Bankman-Fried, once hailed as a cryptocurrency wunderkind, was convicted in 2023 for misusing customer funds to support Alameda Research, invest in speculative ventures, and fund political campaigns. He is appealing his conviction and sentence, which has marked one of the most significant falls in the crypto industry’s history.
Wang’s cooperation and the outcomes for other former FTX executives underline the crucial role whistleblowers and collaborators play in prosecuting large-scale financial crimes.
